Search found 3177 matches

by alex_686
Sun Apr 22, 2018 2:08 pm
Forum: Investing - Theory, News & General
Topic: Why is the SEC yield the one that Vanguard displays?
Replies: 35
Views: 3259

Re: Why is the SEC yield the one that Vanguard displays?

[As for not being able to predict interest rate movement, we can do a pretty decent job of that. Link to a simple tool on how to do so for the simple of case of Fed's fund rates. Now, can we predict with a higher rate of accuracy than the market? http://www.cmegroup.com/trading/interest-rates/count...
by alex_686
Fri Apr 20, 2018 9:32 pm
Forum: Investing - Theory, News & General
Topic: I’m still not a fan of international bond funds
Replies: 107
Views: 5439

Re: I’m still not a fan of international bond funds

Yes, that's the big unknown. According to purchasing power parity, the net outcome is supposed to be the same for both US bonds and developed market bonds (before considering credit differences). But accepting this assumes the market is correct in its estimate of future inflation and short rate dif...
by alex_686
Fri Apr 20, 2018 9:12 pm
Forum: Investing - Theory, News & General
Topic: NYT article: Everyone should hire a financial planner
Replies: 90
Views: 6167

Re: NYT article: Everyone should hire a financial planner

"What is the correct weight..." suggests to me that you think that there is a specific answer that can be known in advance. Whatever gave you that idea? IMO there are some answers that are definitely wrong (like performance chasing and buying at a peak and panic selling at a low), but there are a r...
by alex_686
Fri Apr 20, 2018 7:22 pm
Forum: Investing - Theory, News & General
Topic: NYT article: Everyone should hire a financial planner
Replies: 90
Views: 6167

Re: NYT article: Everyone should hire a financial planner

I always love how financial planners compare themselves to doctors and lawyers. You don't even need a high school diploma to be a "financial planner". Not sure what you point is. I know a doctor - DVM, not MD, who neither graduated high school or college. :happy DVM and the license to practice requ...
by alex_686
Fri Apr 20, 2018 3:18 pm
Forum: Investing - Help with Personal Investments
Topic: How do you compare VNQ vs SP500?
Replies: 18
Views: 887

Re: How do you compare VNQ vs SP500?

I thought SP500 returns should be compared to any mutual fund to understand if additional risk is justified or not It is a common mistake. The S&P is a very popular index and it is the standard bearer. After all it is well constructed and old, representing the US large cap stock market - the larges...
by alex_686
Fri Apr 20, 2018 2:58 pm
Forum: Investing - Help with Personal Investments
Topic: How do you compare VNQ vs SP500?
Replies: 18
Views: 887

Re: How do you compare VNQ vs SP500?

Why would you think that VNQ and the S&P 500 would/should be aligned? They have fairly low correlation. They also have similar risk and return levels. i.e., came geometric return over long periods, same standard deviation of returns. Charts are a particularly bad way of comparing 2 different produc...
by alex_686
Fri Apr 20, 2018 2:49 pm
Forum: Investing - Theory, News & General
Topic: NYT article: Everyone should hire a financial planner
Replies: 90
Views: 6167

Re: NYT article: Everyone should hire a financial planner

HomerJ wrote:
Fri Apr 20, 2018 1:45 pm
I always love how financial planners compare themselves to doctors and lawyers.

You don't even need a high school diploma to be a "financial planner".
Not sure what you point is. I know a doctor - DVM, not MD, who neither graduated high school or college. :happy
by alex_686
Fri Apr 20, 2018 2:31 pm
Forum: Investing - Theory, News & General
Topic: NYT article: Everyone should hire a financial planner
Replies: 90
Views: 6167

Re: NYT article: Everyone should hire a financial planner

Why do you need state of the art? There is real value in letting go of that requirement since investing results don't yield to the pursuit of expertise. It's fine if it's your hobby, or you have a complicated business or estate but the discussion is whether everyone should hire a financial planner....
by alex_686
Fri Apr 20, 2018 1:22 pm
Forum: Investing - Help with Personal Investments
Topic: mutual funds or etfs, why each
Replies: 21
Views: 1263

Re: mutual funds or etfs, why each

From our wiki:
https://www.bogleheads.org/wiki/ETFs_vs_mutual_funds

Honestly - not much difference between the 2. Go with the one you feel is right.
by alex_686
Fri Apr 20, 2018 1:21 pm
Forum: Investing - Theory, News & General
Topic: NYT article: Everyone should hire a financial planner
Replies: 90
Views: 6167

Re: NYT article: Everyone should hire a financial planner

Hope to have younger family that I have shown BH ways as well to watch the quarterly statements to make sure cognitive abilities are still good to go. No reason why anyone in their 20s and will be accumulating for 30-40 years shouldn't be able to put together a 3F and simply rebalance yearly and pe...
by alex_686
Fri Apr 20, 2018 12:44 pm
Forum: Investing - Theory, News & General
Topic: NYT article: Everyone should hire a financial planner
Replies: 90
Views: 6167

Re: NYT article: Everyone should hire a financial planner

I will take the opposite side. The problem with being DIY is that you don't know what you don't know. You get into a emotional and cognitive bias that a 3rd party can help out. The state of the art moves forwards. We might debate if factor investing is worth it but there is always a new tax wrinkle ...
by alex_686
Fri Apr 20, 2018 10:43 am
Forum: Investing - Theory, News & General
Topic: Where to find call dates for bonds in Vanguard Bond Funds
Replies: 7
Views: 239

Re: Where to find call dates for bonds in Vanguard Bond Funds

Ok, so if Vanguard and others use Macaulay Duration when reporting "Average duration", there is no guessing/subjectivity. It's "just math". What about "effective maturity", is that just a synonym for effective duration? In which case there is some subjectivity, and that's why the value on morningst...
by alex_686
Fri Apr 20, 2018 10:33 am
Forum: Investing - Theory, News & General
Topic: Index Funds Return Above Average
Replies: 11
Views: 783

Re: Index Funds Return Above Average

Vizzini: He didn’t fall? INCONCEIVABLE.
Inigo Montoya: You keep using that word. I do not think it means what you think it means.
From the The Princess Bride

You may want to look up what the word "average" means. The market returns, be definition, a average return.
by alex_686
Fri Apr 20, 2018 10:01 am
Forum: Investing - Theory, News & General
Topic: Where to find call dates for bonds in Vanguard Bond Funds
Replies: 7
Views: 239

Re: Where to find call dates for bonds in Vanguard Bond Funds

Note that morningstar uses the fund-provided effective duration. I wonder how much variation there is between funds in how they calculate such numbers. Also, morningstar has a value called "Effective maturity" that I'm not familiar with, which for the NY LT TE fund is almost the same as the effecti...
by alex_686
Fri Apr 20, 2018 9:56 am
Forum: Investing - Theory, News & General
Topic: Where to find call dates for bonds in Vanguard Bond Funds
Replies: 7
Views: 239

Re: Where to find call dates for bonds in Vanguard Bond Funds

Well, maybe 1/2. Duration is the average cash flow in years. Maturity is the big one but each coupon is also a cash flow. Thus a 10 year bond tends to have a duration of 8, even with no calls. Second, you are biting off a pretty big task. Call dates are not enough. IIRC, the maturity date for durati...
by alex_686
Fri Apr 20, 2018 8:31 am
Forum: Investing - Theory, News & General
Topic: Why is the SEC yield the one that Vanguard displays?
Replies: 35
Views: 3259

Re: Why is the SEC yield the one that Vanguard displays?

Does SEC yield assume no changes in interest rates (since they cannot be predicted)? So, suppose I buy a bond fund with a 3% SEC Yield and average duration of six years. If market interest rates drop one percent and I sell my position one year later, will my yield be negative for the time I held th...
by alex_686
Thu Apr 19, 2018 10:05 pm
Forum: Investing - Theory, News & General
Topic: Lack of FDIC Insurance a big deal?
Replies: 39
Views: 3051

Re: Lack of FDIC Insurance a big deal?

am wrote:
Thu Apr 19, 2018 1:10 pm
Did mm accounts exist during the Great Depression? If so, what happened?
No. Mutual funds as we know them did not exist until the 1940s. Before then they were more like closed end trusts. Nisiprius does a great job on explaining why MMF became popular.
by alex_686
Thu Apr 19, 2018 10:00 pm
Forum: Investing - Theory, News & General
Topic: Lack of FDIC Insurance a big deal?
Replies: 39
Views: 3051

Re: Lack of FDIC Insurance a big deal?

I wonder if it’s better to be backed by vanguard/fidelity or fed gov/fdic during next crisis? The assets aren't really 'backed' by Vanguard. Vanguard just manages the assets that stand for themselves, are held in custody by another party/bank, and have a third party accounting firm audit. If the as...
by alex_686
Wed Apr 18, 2018 8:16 pm
Forum: Investing - Theory, News & General
Topic: Lack of FDIC Insurance a big deal?
Replies: 39
Views: 3051

Re: Lack of FDIC Insurance a big deal?

I am OK with Vanguard Prime Money Market, but not necessarily with MM funds from other vendors. Furthermore, I am suspicious of other vendors who might use 1-3 month T-bills for their MM funds nowadays, but might switch to something else to bail out another part of the company in a crisis. No, prob...
by alex_686
Wed Apr 18, 2018 2:04 pm
Forum: Investing - Theory, News & General
Topic: Lack of FDIC Insurance a big deal?
Replies: 39
Views: 3051

Re: Lack of FDIC Insurance a big deal?

In 40 years, IIRC, only 3 money market funds have broken the buck. Money was tied up for a few weeks as everything got figured out, everybody was paid 97+ cents on the dollar.
by alex_686
Wed Apr 18, 2018 11:23 am
Forum: Investing - Theory, News & General
Topic: Why is the SEC yield the one that Vanguard displays?
Replies: 35
Views: 3259

Re: Why is the SEC yield the one that Vanguard displays?

Also, the SEC yield nets out the expense ratio which also makes it easier to compare between funds. Are you saying distribution yield does not net out expense ratio? That's my understanding. Per Investopedia: "The distribution yield of a security is calculated by dividing the distributions paid (ye...
by alex_686
Wed Apr 18, 2018 8:53 am
Forum: Investing - Help with Personal Investments
Topic: Please help me with arguments for/against actively managed...
Replies: 34
Views: 1568

Re: Please help me with arguments for/against actively managed...

There is a classic article out there called "Alpha Hunters and Beta Grazers" by Martin Leibowitz. It talks about under what conditions you should be active - "Alpha", and when passive - "Beta"
by alex_686
Tue Apr 17, 2018 4:45 pm
Forum: Investing - Help with Personal Investments
Topic: Expense ratios calculations
Replies: 9
Views: 319

Re: Expense ratios calculations

200,000 * .0001 = $20
by alex_686
Tue Apr 17, 2018 4:20 pm
Forum: Investing - Help with Personal Investments
Topic: Expense ratios calculations
Replies: 9
Views: 319

Re: Expense ratios calculations

Expense ratios are a combination of backwards looking and forward looking info. Backwards includes things like printing and postage. Forward looking includes things like portfolio management. I can't remember if the costs are broken down in the annual report or the supplemental report - one of the 2...
by alex_686
Tue Apr 17, 2018 4:11 pm
Forum: Investing - Theory, News & General
Topic: Why is the SEC yield the one that Vanguard displays?
Replies: 35
Views: 3259

Re: Why is the SEC yield the one that Vanguard displays?

I think I know the trick here. The SEC yield covers all income, less expenses. So both coupon and capital appreciation. The fund only distributes coupon income. Are you sure? I’m no expert but how can any fund company know what the capital appreciation will be looking forward 30 days? I am a bit ru...
by alex_686
Tue Apr 17, 2018 1:01 pm
Forum: Investing - Help with Personal Investments
Topic: (U.K) Advice sought on Long Term Gilt index
Replies: 11
Views: 760

Re: (U.K) Advice sought on Long Term Gilt index

First, why gilts? Is your primary currency the UK pound? If so, o.k. If not I would be worried about currency risk.

Second, expected increases in bond yields are already priced in. We can dig into this if you want.
by alex_686
Tue Apr 17, 2018 11:50 am
Forum: Investing - Theory, News & General
Topic: China Hustle Movie
Replies: 33
Views: 3858

Re: China Hustle Movie

China reminds me of the railroad business in the US and UK during the 1880s. Some were solid ventures. Sometimes their prices were manipulated by speculators, operators, insiders, and con-men. Others were speculative. Sometimes they were a daring speculative venture, sometimes with a solid plan, oth...
by alex_686
Tue Apr 17, 2018 11:16 am
Forum: Investing - Theory, News & General
Topic: Why is the SEC yield the one that Vanguard displays?
Replies: 35
Views: 3259

Re: Why is the SEC yield the one that Vanguard displays?

Looks like holders of VSBSX, defined above, will get half the yield of the SEC figure, if things remain the same. Still, if that's the requirement, as Pajamas posted, then I guess that's that. I think I know the trick here. The SEC yield covers all income, less expenses. So both coupon and capital ...
by alex_686
Tue Apr 17, 2018 11:12 am
Forum: Investing - Theory, News & General
Topic: buying bonds
Replies: 8
Views: 651

Re: buying bonds

Why do you wish to buy individual bonds rather than simply holding a bond fund? My perhaps erroneous understanding is that the price of shares in a bond fund fluctuates and will go down if interest rates increase. By buying an individual bond(s) and holding them to maturity, I avoid that loss. Yes,...
by alex_686
Tue Apr 17, 2018 10:05 am
Forum: Investing - Theory, News & General
Topic: Why is the SEC yield the one that Vanguard displays?
Replies: 35
Views: 3259

Re: Why is the SEC yield the one that Vanguard displays?

SEC yield is forward looking, which is better in my opinion.

SEC yield is standardized. All funds have to use the same methodology. It makes comparisons easy.

I personally think that it is one of the higher quality numbers on a fund's fact sheet.
by alex_686
Tue Apr 17, 2018 9:55 am
Forum: Personal Finance (Not Investing)
Topic: For those that re-invest dividends automatically...
Replies: 15
Views: 2275

Re: For those that re-invest dividends automatically...

To put my own spin on things: When evaluating investing always use "Total Returns" - dividends and capital appreciation. It is the only logically consistent way of viewing the issue. Focusing on dividends tends to lead to bad decisions. To extend on why dividends should not be considered part of you...
by alex_686
Tue Apr 17, 2018 6:22 am
Forum: Investing - Theory, News & General
Topic: CAPE mean reversion: country specific or to the global average?
Replies: 23
Views: 1513

Re: CAPE mean reversion: country specific or to the global average?

CAPE does not return to the mean in the US. I don't know about other countries but I can't think of why it would. Returns are based on market structures and these change over time. Sometimes, as I think is the current situation, there is a surplus of capital which will reduce returns. Other times th...
by alex_686
Mon Apr 16, 2018 9:18 pm
Forum: Personal Finance (Not Investing)
Topic: Use 25k From Brokerage Account For Investment Property?
Replies: 29
Views: 2136

Re: Use 25k From Brokerage Account For Investment Property?

Going into investment property is a job. It requires time, skill, and luck. I would start in my backyard where I could put my local knowledge to good use. I would also suggest that you pass right now. This would be the majority of your taxable investments. Something will go wrong. The roof will need...
by alex_686
Mon Apr 16, 2018 4:16 pm
Forum: Investing - Help with Personal Investments
Topic: question on wells Fargo Target 2020 CIT Class E3
Replies: 3
Views: 152

Re: question on wells Fargo Target 2020 CIT Class E3

thank you alex_686. My problem is in my vanguard outside investments, since above fund not available, I am using the equivalent Target 2020 Fund (WFOBX) which 45% equities and the rest in Bonds. This is showing completely wrong asset allocation Pull up the fund's Statement of Investment in the late...
by alex_686
Mon Apr 16, 2018 3:13 pm
Forum: Investing - Theory, News & General
Topic: Some basic questions about bond index funds
Replies: 23
Views: 1922

Re: Some basic questions about bond index funds

Bill / Note / Bond are for Treasuries. Corporate obligations are Commercial Paper (short term) and Bonds. Once a bond always a bond. A 30 year old bond with a day left to maturity is still a bond. It says so right there in its name. Check the annual report SOI of your choice. Lastly, a newly issued ...
by alex_686
Mon Apr 16, 2018 1:43 pm
Forum: Investing - Help with Personal Investments
Topic: question on wells Fargo Target 2020 CIT Class E3
Replies: 3
Views: 152

Re: question on wells Fargo Target 2020 CIT Class E3

I would dig deeper. They may be getting exposure via derivatives like futures and forwards. These synthetic positions return the same as actually holding the underlying position but is often cheaper to implement for small funds.
by alex_686
Mon Apr 16, 2018 12:30 pm
Forum: Investing - Help with Personal Investments
Topic: What advantages do a personalized portfolio have over a target date fund, in your opinion?
Replies: 49
Views: 2869

Re: What advantages do a personalized portfolio have over a target date fund, in your opinion?

As your wealth increases, does your risk tolerance increases or decreases? Target Date funds assumes it remains constant, which is probably the wrong answer. FYI, I am a mild fan of target date funds. A bit to generic, a bit too conservative, but a very simple solution for those you are looking for ...
by alex_686
Sun Apr 15, 2018 3:37 pm
Forum: Investing - Theory, News & General
Topic: Some basic questions about bond index funds
Replies: 23
Views: 1922

Re: Some basic questions about bond index funds

Quantitative easing, as the term is used by the financial media, involved printing money electronically and using it to buy treasuries longer than the t-bills the Fed traditionally holds on its balance sheet, and also to buy mortgages. Why would that have an effect on the makeup of the total bond i...
by alex_686
Sun Apr 15, 2018 3:16 pm
Forum: Investing - Theory, News & General
Topic: How accurately can we measure INFLATION?
Replies: 89
Views: 3656

Re: How accurately can we measure INFLATION?

A big issue is how to measure changes in quality. Compare a car from the 1970s to one today. Today's car is more expensive. Part of that is from inflation. Part of that is that today's car are larger, safer, more fuel-efficient, have more features (like GPS), are more durable, etc. From year to year...
by alex_686
Sun Apr 15, 2018 11:27 am
Forum: Investing - Theory, News & General
Topic: Some basic questions about bond index funds
Replies: 23
Views: 1922

Re: Some basic questions about bond index funds

1. Yes, it is by market weight as well. For example, when the Fed implemented Quantitative Easing it dumped lots of long treasuries on the market. Total Bond indexes started to skew towards long government bonds. 2. Yes and No. I assume you are not talking about a Intermediate Bond Index which holds...
by alex_686
Sat Apr 14, 2018 1:29 pm
Forum: Investing - Theory, News & General
Topic: Why are expected returns so much lower than historical returns?
Replies: 153
Views: 8297

Re: Why are expected returns so much lower than historical returns?

Anyway, I think the predictions of slower, lower growth are wrong. I think the next decade will bring fantastic improvements in internet speed, commercial space, and the personal connectivity that smart phones bring. And the US will dominate in energy production. All of these will increase producti...
by alex_686
Sat Apr 14, 2018 7:46 am
Forum: Investing - Help with Personal Investments
Topic: What is the portfolio role of a leveraged bond fund like PONDX?
Replies: 60
Views: 4837

Re: What is the portfolio role of a leveraged bond fund like PONDX?

I am a bit calmer when it comes to leveraged bond funds. They are doing a carry trade. They are shorting short term low yield bonds and buying longer term higher yield bonds. As long as the yield curve slops upwards, that is as long as long term rates are higher than short term rates, you generate ...
by alex_686
Fri Apr 13, 2018 4:12 pm
Forum: Investing - Help with Personal Investments
Topic: Aren't we betting a bit too heavily on US stocks and bonds?
Replies: 34
Views: 2589

Re: "How Much International Stock? A Suggestion"

It's a British company, much like all of Hong Kong used to be. Why is it British? It's headquarters might be in London but most of its profits are overseas. It thinks its future is in Asia and is moving people and assets over there. I mean, it has more customer accounts by value in HK then it does ...
by alex_686
Fri Apr 13, 2018 3:55 pm
Forum: Investing - Help with Personal Investments
Topic: Aren't we betting a bit too heavily on US stocks and bonds?
Replies: 34
Views: 2589

Re: "How Much International Stock? A Suggestion"

Here are the top 10 holdings of the Vanguard European Stock Index Fund. ... 3 HSBC Holdings plc ... 3 are Swiss. From a GNP perspective does that sound right? 3 are quasi-American, with over 40% revenue and shareholders coming from the US. There is 1 Hong Kong company. The UK is hitting above its w...
by alex_686
Fri Apr 13, 2018 2:04 pm
Forum: Investing - Help with Personal Investments
Topic: Aren't we betting a bit too heavily on US stocks and bonds?
Replies: 34
Views: 2589

Re: Aren't we betting a bit too heavily on US stocks and bonds?

I'm curious, how can I find what each countries free float market weight is? The best choice, in my opinion, would be to go to the indexer's website. MSCI and FTSE are the 2 big ones. Or go to the multinational index fund of your choice. Their fact sheet normally has that data. If not, the annual r...
by alex_686
Fri Apr 13, 2018 2:01 pm
Forum: Investing - Help with Personal Investments
Topic: Aren't we betting a bit too heavily on US stocks and bonds?
Replies: 34
Views: 2589

Re: "How Much International Stock? A Suggestion"

Thanks, I'll read that in a moment. I'm from Europe and lately I've been thinking about how much I should invest in my home country's stock market, European stocks, US stocks, developed and emerging markets, etc. Here are the top 10 holdings of the Vanguard European Stock Index Fund. 1 Royal Dutch ...
by alex_686
Fri Apr 13, 2018 1:51 pm
Forum: Investing - Help with Personal Investments
Topic: Aren't we betting a bit too heavily on US stocks and bonds?
Replies: 34
Views: 2589

Re: Aren't we betting a bit too heavily on US stocks and bonds?

By free float market weight the US equity markets makes up about 50% of the world cap. So a neutral position would be 50% US. There are a couple of key takeaways here. The link between a country stock market and a country's GDP is low. Mega-cap multinationals dominate the indexes. Where there are in...
by alex_686
Fri Apr 13, 2018 1:14 pm
Forum: Investing - Help with Personal Investments
Topic: Grandparents requested our help to manage $300K
Replies: 21
Views: 2311

Re: Grandparents requested our help to manage $300K

First, write up a ISP. It is foolish to suggest a asset allocation without talking about Grandparents risk tolerance and goals. Maybe 100% CDs is what they need, to meet minimum required retirement spending goals. Maybe 100% equities if it is to pay for unconceived grandchildren's college education ...
by alex_686
Fri Apr 13, 2018 1:10 pm
Forum: Investing - Help with Personal Investments
Topic: Guaranteed 9% annualized return?
Replies: 26
Views: 2272

Re: Guaranteed 9% annualized return?

Once again, why is everyone discounting the negative coupon rate to 2.75% if I am not going to be able to itemize? Sorry about that. The home mortgage deduction has been been a important part of these calculations for so long it has become ingrained. However my point still stands - it is a negative...
by alex_686
Fri Apr 13, 2018 12:12 pm
Forum: Investing - Help with Personal Investments
Topic: Guaranteed 9% annualized return?
Replies: 26
Views: 2272

Re: Guaranteed 9% annualized return?

Your mortgage has an effective after tax rate of 2.75%. 3.875*(1-.29) Your mortgage is a negative bond. Any pre-paid principle applied will thus give you a return of 2.75%. Emotionally I know where you are coming from but your logic is wrong. Personally, I would advocate leverage. Take that extra pr...